This year, growth in Greece and Spain is expected to exceed 2%, while other European member states growth is expected to be barely 0.8%
Giannis Moschos recalls the difficult times. His country is the subject of jokes, its economy in ruins, and business partnerships in ruins.
In 2012, Moschos and his brother established their family olive company in Greece. After growing the business, he now wants to contribute to Europe‘s future by producing high-quality products using renewable energy, saving costs, and supporting the ambitious climate goals of the continent.
A similar rewriting of history is occurring throughout much of Southern Europe as once-economic basket cases Greece, Spain, and Portugal begin to show off after years of grueling through severe crises and protracted recessions.
With growth rates double the average for the euro area and significantly higher than many of their neighbors, they have emerged as the region’s outperformers. This year, growth in Greece and Spain is expected to exceed 2%, while the euro area’s growth is expected to be barely 0.8%. The greatest economy in the region, Germany, will hardly expand.
However, the effects of the recession are still felt, especially in the job market, and the process of repairing one’s reputation never ends. A perception that Southern Europe is careless, slothful, and unproductive—clinging to the euro only because of bailouts from wealthier northern European nations—was ingrained during the crisis.
These issues and perceptions certainly contributed to creating a division within the geographical boundaries of Europe.
According to Moschos, when Greek companies began exporting at the start of the crisis, missteps—or even outright scams in certain cases—brought them a poor reputation.
He mentioned that the main obstacle they encountered throughout the crisis was other markets’ lack of confidence in Greece. Now, things are different. The hope for governments, companies, and households is that this newfound dynamism doesn’t turn out to be a fad.
While there are other factors at play, tourism and the post-pandemic spike in tourists account for a portion of it. Additionally, a thorough cleaning process that lasted for years has strengthened these economies.
The director general of the Foundation for Economic and Industrial Research in Athens, Nikos Vettas, declared, that the uncertainty for Greece and the rest of the Southern countries is now gone.
This does not imply that much work still has to be done. The most crucial element, though, is the absence of uncertainty, as in the past it drove away labor and capital.
For instance, Greece’s debt load increased, and it lost a fourth of its output over the course of a ten-year crisis.
However, the nation’s debt-to-GDP ratio dropped to its lowest level in almost ten years last year, and it was able to regain its investment grade. S&P Global Ratings downgraded France last month, indicating a change in direction.
Apart from the effects of the epidemic, Portugal’s debt ratio has also been declining recently after reaching unmanageable heights.
Fashion designer Ana Penha e Costa, who returned from Brazil in 2014 after working at a Rio de Janeiro clothes boutique, remarked that when she arrived in Portugal nothing was going on.
She chose to launch her own online clothes company even though Portugal was still fighting to recover from a severe recession and reduce record unemployment. Penha e Costa launched her first real store in the heart of Lisbon two years later. The 36-year-old stated, “Today, 80% of our clients are foreigners.” “We’re doing very well.”
Moschos Olives is growing in Greece because its current location can no longer accommodate its needs. It’s applied to the RRF, an EU post-pandemic fund, to become green by installing solar panels and switching to electric forklifts beginning this summer.
Raising salaries and standards of life is still a significant challenge. According to data from Eurostat, the minimum wage in Portugal and Greece is less than €1,000 per month. If that isn’t addressed, it might encourage the kind of voter unhappiness that is now evident throughout much of Europe.
The three biggest economies in the world, Germany, France, and Italy, all saw advances for far-right and populist parties in the most recent European Parliament elections. The stability that companies and investors need to see in the area is threatened if that results in more generalized uncertainty about politics and policies.
While fiscal conditions remain risky, the efforts of the last ten years are beginning to pay dividends. Bond spreads remained mostly contained even as the European Central Bank reduced its bond-buying initiatives, which were once a major lifeline.
Ten years ago, investor concerns that dominated the bond market also reduced.
